Question

How do you do a Cost of Production report?

Answer 1

Cost of production shall consists of Materials consumed, Direct Wages & Salaries, Direct Expenses, Works overhead, Quality control costs, Research & Development Cost, Packing Cost, Admnistrative overheads relating to production.

To arrive at cost of production of goods dispatched then adjustment for stock of work in process, finished goods, recoveries for sales of scrap, wastage etc. shall be made.

the production process may generate scrap and waste. Realized or realizable value of scrap or waste shall be credited to the cost of production.

Misc. income relating to production shall be adjusted in the claculation of cost of production.

Cost of materials consumed

Cost of process materials or chemicals consumed

Cost of utilities consumed

Cost of direct employees

Cost of direct expenses

Cost of stores and spares consumed

Cost of repairs and maintenance

Cost of quality control

Cost of research and development

Cost of technical knowhow fee or royalty

Cost of depreciation or amortization

Cost of other production overheads

Cost of industry specific operating expenses

Total of inputs and conversion cost

Cost of increase/decrease in work-in-progress

Credits for recoveries

Cost of primary packing

Cost of production or operations

Cost of finished goods purchased

Total cost of production and purchases

Cost of increase/decrease in finished goods

Cost of self or captive consumption

Cost of other adjustments

Cost of production or operations of goods or services sold

Any abnormal cost shall not form part of cost of production.

Please comment in case of any clarification required.